Second, three out of its six directors have been questioned by the Commercial Affairs Department (CAD) in two separate matters.

Third, Mr Lee Kim Huat, the lead independent director of Figtree Holdings, bought placement shares in SGX-listed Cacola Furniture International Ltd even as Ernst & Young was investigating discrepancies in its cash holdings.

Later, Ernst & Young revealed Cacola Furniture's actual cash reserve was much less than what was stated in its financials.

Fourth, Figtree Holdings will spend more than 40% of the placement proceeds on property development projects in which it only has a 20% interest.

..with a very brief track record of three years…

Fifth, Figtree Holdings is spending more than 17% of the proceeds on listing expenses, which include professional fees.

PrimePartners Corporate Finance Pte Ltd is the manager, sponsor and placement agent of the IPO.

The prospectus was not reviewed by MAS. Instead, it was registered by the Singapore Exchange Securities Trading Limited (SGX-ST), acting as agent on behalf of the Monetary Authority of Singapore, on October 29.

Background & Restructuring Exercise

Figtree Holdings Ltd was incorporated in Singapore by its Executive Chairman and Managing Director of Figtree Holdings Ltd Danny Siaw and Tan Chew Joo on June 5, 2013.

Apart from designing and building commercial and industrial facilities, it also holds minority interests in property development.

Figtree Projects Pte Ltd - a wholly-owned subsidiary of Figtree Holdings - has a B2 grade registration with the Building and Construction Authority (BCA) under the category of CW01 for general building.

Subsequently, on October 8, Figtree Holdings allotted 999,998 new shares in consideration for the acquisition of Figtree Projects Pte Ltd.

As a result, Figtree Holdings Ltd had a share capital of 1 mln shares after the acquisition on October 8.

Soon after, each share of Figtree Holdings Ltd was split into 223 shares.

Therefore, immediately before the placement of shares in this IPO, Figtree Holdings Ltd's share capital comprised of 223 mln shares.

Now, page 58 of the prospectus shows the shareholding pattern of Figtree Holdings Ltd immediately before the IPO.

Taking in account the sale of 13,139,200 shares by Danny Siaw to Singapore Enterprises Pte Ltd (page 60) and simply dividing the number of shares of every shareholder by 223 should reflect the shareholding pattern of Figtree Holdings Ltd immediately before the splitting of shares.

So, this should have been the shareholding pattern of Figtree Holdings Ltd immediately before the share-split: Danny Siaw had a 34.33% stake (343,333 shares), Tan Chew Joo had a 11.67% stake (116,667 shares), Singapore Enterprises had a 19% stake (190,000 shares), Eileen Tan had a 5% stake (50,000 shares) and Robert Oei, Fung Tze Ping, Teoh Hoon Song had a 10% stake (100,000 shares) each.

Since the shareholders of Figtree Projects Pte Ltd were allotted shares in the proportion of their interest in it, the shareholding pattern of Figtree Projects Pte Ltd before the acquisition was: Danny Siaw had a 34.4% stake, Singapore Enterprises Pte Ltd had a 19% stake, Tan Chew Joo had a 11.6% stake, Eileen Tan had a 5% stake and Robert Oei, Fung Tze Ping, Teoh Hoon Song had a 10% stake each.

A few months later, in August 2012, Ernst & Young's independent audit report highlighted Cacola Furniture's cash and bank balances were misstated in the financial statements. The auditor couldn't get access to all the information necessary to work out exactly how much cash it had, but it concluded that it was well short of the RMB 83.5 mln stated in the financials.

That would explain why Cacola was trying to raise S$700,000 in cash.

The whole episode makes us wonder why Mr Lee was so keen to invest in Cacola Furniture International Ltd when the existence of its cash reserves was doubtful.

Moreover, if he couldn't see the fraud at Cacola Furniture, what actions will Mr Lee take to safeguard shareholders' interests as the lead independent director of Figtree Holdings Ltd?

Management ReplyMr Lee had agreed to take up the placement shares of Cacola somewhere in Nov 2011 before the company appointment of an independent auditor (EY) to look into cash position of the company. He had done some vital analysis of the company in term its cash position, NAV, borrowings and others ratios before making an investment bearing in mind the information available to Mr Lee is limited as he can only rely on the external audited report and interim announcement by the company approved by the board. As at 30/09/2011 the latest information available to Mr Lee, the company has no borrowings, has healthy cash and cash equivalent position, reasonable good NAV and in-addition there is a major change in the board of directors and furthermore the external auditor had not made any qualification in the auditor’s report since the company being listed on the SGX-ST. Based on the EY report, the investigation by IA [Independent Audit] of EY [Ernst & Young] do not discover or reveal any frauds committed by the management in regard to its cash position. It appears the investment seemed to be sound as the company has entered into an MOU to acquire a 51% stake in the "proposed hubei goldmine" in china as announced in the sgxnet. With Mr Lee’s extensive experience in the finance and accounting, serving as a past group CFO in a listed company as well as serving past directorship of few private limited companies and more over as a lead ID [Independent Director] of Figtree, he has direct access to the board as well as to the management to obtain any information he desired. He has a power to review, performing, examine, asking questions, etc, vis-a-vis, the system of internal controls systems / accounting standards, compliances, accounting functions and other listing requirements are in place and to make recommendations so to enhance the effectiveness of the operating system, to investigate any matter within its terms of reference and to report to the board, audit committee and the relevant authorities without fears for any irregularities, wrong doings or frauds detected and to ensure good corporate governance has always being maintained and implemented to a high standard of accountability to the shareholders and the company.

(Total:10 questions)

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